Stocks open lower a day after their biggest drop since June

The Nasdaq climbed 0.8% thanks largely to gains in several big technology companies, but other indexes fell. Energy stocks fell along with the price of crude oil.
A specialist trader works at his post on the floor of the New York Stock Exchange (NYSE) in New York, US.(Reuters)
A specialist trader works at his post on the floor of the New York Stock Exchange (NYSE) in New York, US.(Reuters)
Updated on Oct 29, 2020 07:46 PM IST
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ByAssociated Press | Posted by Shivani Kumar

Stocks are off to a lower start on Wall Street, stablizing a day after taking their sharpest drop since June. The S&P 500 slipped 0.3% in the early going Thursday. The Nasdaq climbed 0.8% thanks largely to gains in several big technology companies, but other indexes fell. Energy stocks fell along with the price of crude oil. Closely watched reports on third-quarter economic growth and claims for unemployment benefits came in better than expected, but still pointed to a struggling economy. It’s a huge day for company earnings. Apple. Amazon, Facebook and Google’s parent company release their results after the closing bell.

European shares opened higher Thursday after Asian shares logged moderate losses following a sell-off on Wall Street sparked by surging coronavirus counts and fresh pandemic shutdown measures.

Shares gained in Paris, London and Shanghai but fell in Tokyo, Hong Kong and Sydney on Thursday. US futures were higher.

Oil prices extended their losses on expectations that the pandemic may cause further disruptions that would crimp demand for energy.

Investors were awaiting US economic growth numbers and the release by China’s communist leadership of a five-year plan expected to focus on building advanced technologies.

Japan’s central bank kept its ultra-loose monetary policy unchanged while downgrading its outlook due to Covid-19 outbreaks.

“Our nation’s economy is still in a severe situation from the effects of the coronavirus both inside and outside of Japan. But since business activity has restarted, we can say that the economy has been recovering,” BOJ Gov. Haruhiko Kuroda told reporters.

Germany’s DAX jumped 0.7% to 11,649.34, while the CAC 40 in Paris climbed 0.5% to 4,595.33. In London, the FTSE 100 edged 0.2% higher. Signaling fresh buying enthusiasm after Wednesday’s rout, US futures rose, with the contract for the S&P 500 up 0.9% at 3,294.60. The future for the Dow industrials added 0.7% to 26,598.00.

The rebound in Europe followed steep losses the day before, after the French president announced tough measures to slow the virus’ spread and German officials agreed to impose a four-week partial lockdown. The alarm spread to Wall Street, where the S&P 500 slid 3.5% overnight for its biggest drop since June.

So far, the measures are not as stringent as shutdown orders that swept the world early this year, but the worry is they could still hit the already weakened global economy.

In Asia, some places such as Thailand and Taiwan appear to be keeping the pandemic in check, while caseloads surge in others. India surpassed 8 million confirmed Covid-19 cases, second only to the US, on Thursday with nearly 8.86 million. Indonesia and the Philippines are struggling to keep outbreaks in check, and fresh clusters of cases are being reported in Japan.

“When it rains, it pours, particularly if you are following today’s Covid-19 headlines,” Edward Moya of Oanda said in a commentary. “An overvalued stock market was ripe for a pullback, but when you focus on Covid-19 headlines, it looks more like panic-selling.”

Retail sales in Japan, the world’s third largest economy, fell 8.7% from a year earlier in September, according to data reported Thursday. While purchases of goods has recovered somewhat, services remain weak.

The Japanese central bank has been pumping tens of billions of dollars into the economy every year, trying to restore stable growth as the country’s population shrinks and ages. Japan was already in recession when the pandemic began.

Tokyo’s Nikkei 225 index fell 0.4% on Thursday to 23,331.94, while Hong Kong’s Hang Seng lost 0.5% to 24,586.60. In South Korea, the Kospi lost 0.8% to 2,326.67, while the Shanghai Composite index recovered from early losses, gaining 0.1% to 3,272.73. Australia’s S&P/ASX 200 declined 1.6% to 5,960.30.

Shares also fell in Taiwan and Southeast Asia.

In the US, cases are increasing in just about every state and the number of deaths and hospitalizations due to Covid-19 are on the rise. Uncertainty over the upcoming presidential election has also been pushing markets around.

Crude oil wavered between losses and gains after losing 5.7% on Wednesday. On Thursday, US benchmark crude lost 26 cents to $37.12 per barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the international standard, gave up 29 cents to $39.35 per barrel. It fell 5.4% to $39.64 per barrel on Wednesday.

As usual whenever volatility spikes, investors headed into the safety of US government bonds. The yield on the 10-year Treasury note was at 0.78%, down from as high as 0.87% last week.

Investors’ hopes that Congress and the White House could soon offer more big support for the economy as it struggles through the pandemic have largely faded. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have continued their talks, but investors see little chance of a deal happening before Election Day next week.

Economists say the economy likely needs such aid after the expiration of the last round of supplemental unemployment benefits and other stimulus approved by Washington earlier this year.

In currency dealings, the dollar weakened to 104.25 Japanese yen from 104.34 yen. The euro fell to $1.1736 from $1.1747.

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